Crude Oil Rises From 13-Month Low on Signs OPEC Will Cut Output

By Mark Shenk

Oct. 17 (Bloomberg) -- Crude oil advanced from a 13-month low on signs that OPEC will announce a production cut at a meeting next week.

The Organization of Petroleum Exporting Countries, which supplies more than 40 percent of the world's oil, brought forward to next week a November meeting to discuss output levels. Oil has tumbled more than 50 percent since reaching a record $147.27 in July because the financial crisis threatens to push the world into a recession, curbing fuel demand.

``OPEC has to be very careful because we are on the verge of a major global recession,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``Consumers are going to make their case to the Saudis over the next week so the meeting's result isn't a forgone conclusion.''

Crude oil for November delivery rose $1.38, or 2 percent, to $71.23 a barrel at 10:17 a.m. on the New York Mercantile Exchange. Prices are down 19 percent from a year ago.


``We really overdid it on the down side,'' said Dan Flynn, an energy analyst at Alaron Trading Corp. in Chicago. ``We are also up on concern that OPEC will cut output next week.''

OPEC will likely reduce oil output by 1 million barrels a day at next week's meeting to check the drop in prices, Qatari Oil Minister Abdullah al-Attiyah said.

OPEC oil supplies fell 3.8 percent in September to 31.8 million barrels a day, according to data from Geneva-based consultants PetroLogistics Ltd. The amount declined from 33.05 million barrels in August because of lower sales by Saudi Arabia and Iran, Conrad Gerber, the company founder, said yesterday.

``Demand looks bad and until things improve the market is going to be under pressure,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``Every rally is a selling opportunity.''

Lower Demand

Fuel demand in the U.S., consumer of 24 percent of the world's oil, was at the lowest since July 1999 during the past four weeks, according to a weekly supply report from the Energy Department. Demand averaged about 18.6 million barrels a day, according to yesterday's report.

Brent crude oil for December settlement rose $1.33, or 2 percent, to $69.17 a barrel on London's ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.